2017 YEAR IN REVIEW ~ RIVIERA REAL ESTATE REPORT

One year ago I reported that 97 closed sales were the most that had been recorded in the Riviera within the last 10 years. Furthermore, the median price had reached an all-time high of over $2 million. Clearly 2016 was a benchmark year for the Riviera real estate market. My prediction at that time was that this momentum would continue, and I can now report that this is exactly what happened as the final numbers for 2017 are also impressive. The median price for the year was $1,925,000 which is actually about a 5% decrease from 2016, however the total number of sales hit a new high of 102!

A closer look at the numbers illustrates why 2017 should be considered a banner year in the Riviera real estate market even though the median price did not keep pace with the previous year. The biggest difference was that there was more activity in the lower end of the market in 2017. The $1 - $2 million segment of the market produced 22% more sales along with 18% fewer sales in the $2 - $4 million range, however both years produced 5 sales in the lofty $4 million plus category. Furthermore, the median price increase in 2016 was a bit skewed due to the abnormally large amount of sales in the higher end of the market that year. The final median price in 2017 is still an impressive 17% above the level it reached just two years ago. Overall 2017 can best be described as a balanced yet robust real estate market characterized by a continuing increase in the number of sales combined with a sustainable level of appreciation.

At this time I don’t see any reason why 2018 will not continue on this path as long as the inventory levels remain healthy and sellers are realistic about the value of their homes. There is no question that one of the reasons the number of sales declined in the $2 to $4 million segment last year was that many properties lingered on the market as the well-educated buyer pool did not chase overpriced listings. The other potential wildcard in the Riviera market this year is that the demand may actually increase due to the recent fires and mudslides in Montecito. Some of the people whose homes were damaged or destroyed have already purchased and/or are looking for homes in Santa Barbara. This will be an interesting dynamic to keep our eye on as the year progresses.

2017 FIRST HALF ~ RIVIERA REAL ESTATE REPORT

I reported 6 months ago in the 2016 Year In Review article that “the Riviera was the best performing sub-market in the entire Santa Barbara south coast”. After analyzing the numbers from the first 6 months of this year it is apparent that the Riviera market is still very robust. While the median price of $1,975,000 has not changed from the first half of 2016, the number of sales in each price category is almost identical. This indicates that the market is continuing on its torrid pace in terms of the number of sales, however the healthy balance between buyers and sellers is alleviating pressure on prices in either direction.

As of this writing the current inventory also looks promising with 47 active listings, about one third of which are under contract with a median list price of $2,195,000. If this pace continues the Riviera market could surpass last year’s record setting numbers of 97 sales with a median price of just over $2 million. In order for this to happen however, it is imperative that the flow of inventory continues and that sellers do not have unrealistic expectations when it comes to pricing their homes. Another interesting statistic to take note of is the amount of time it takes for properties to go under contract after coming on the market. The average “days on market” for the listings that sold in the first 6 months was 47 compared to 56 for the overall South Coast market. A more detailed analysis illustrates that the properties at or below the 47 day mark sold for very close to the list price, whereas those that were on the market for a longer period of time underwent substantial price reductions before they finally sold. This is an excellent case study for potential sellers to analyze before setting a list price for their property.

One final note of interest is the trend that I mentioned in last year’s report regarding the resurgence of the home renovation market. The five highest sales so far this year were all either new construction or thoroughly renovated high quality homes ranging in price from $3.4 to $6.6 million. I personally witnessed the strong demand for this type of property, as one of the developers was my client who built a beautiful contemporary home on the lower Riviera. Not only did this sale set a precedent for the neighborhood at $3.4 million but it went under contract while it was still under construction and closed escrow the day it was finished. While being a developer in Santa Barbara is not for the faint of heart it can be a rewarding endeavor due to the lack of quality new construction in an established neighborhood like the Riviera.

Riviera Real Estate – Santa Barbara, CA

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